Notes: I’ve been in and out of the pound on the short side for the majority of the week as we test the 1.5918/22 support range. The last attempt penetrated into the 1.59- handle before mounting a 70 pip rally off the lows into former support at 1.5965. While some of the move can be attributed to the ongoing headlines coming out of Washington, it should be respected and we will continue to favor selling into resistance with RSI conviction as long as we hold below the weekly range high / channel resistance. A clear break below (and close) 1.5918 looks to target subsequent support objectives.

Two important things I think we should keep in mind here; 1- Strong UK data, including unemployment, housing and inflation, have been unable to halt the broader decline off the October high (made on October 1st*) suggesting that momentum remains heavy in the near-term. 2- The reversal off the high was at a key technical level; 1.6253 is the highest close of the year made on January 2nd (Oct high 1.6259) with the nature of the decline exemplifying notable structure. That said, we are at support and a reversal back above last week’s highs shifts the near-term focus back to the topside with a break above the monthly highs challenging trendline resistance dating back to the 2009 high, currently just shy of the 1.63-handle.

* It’s extremely important to give added consideration regarding the timing of intra-day scalps with the opening ranges on a session & hourly basis offering further clarity on intra-day biases.

Please note the information on this website is intended for retail customers only, and not for any Eligible Contract Participants (i.e., institutional clients) as defined in the Commodity Exchange Act §1(a)(12).